Keeping cool

Features - Safety Focus

Heat and hot environments can affect both indoor and outdoor workers, resulting in illness and injury. According to the Bureau of Labor Statistics, 4,190 injury and illness cases arose from exposure to environmental heat that resulted in one or more days of lost work among private industry and state and local government workers in 2010.

Heat-related illnesses may include heat stroke, heat exhaustion, heat cramps and heat rash. These illnesses develop when the body becomes overheated through the combined contributions of metabolic heat (e.g., the internal heat we produce in proportion to work intensity), environmental factors (e.g., air temperature, humidity, etc.) and clothing or personal protective equipment. In addition to illnesses, injuries related to working in a hot environment may occur because of sweaty palms, fogged-up safety glasses, dizziness or contact with hot surfaces or steam.

It is important for facility managers to address heat-related risks and to provide workers with preventive measures so they can go home injury and illness-free.

The importance of training

Everyone can benefit from training, whether it is the person who has been working for five years or the new hire. Periodic training is warranted because high temperatures can result in heat stroke, which can be deadly.

Everyone (supervisors and workers) should be trained to recognize symptoms of a heat-related illness. These symptoms may include rashes, cramps, headaches, nausea, dizziness, weakness, elevated body temperature, decreased urine output, profuse sweating, loss of consciousness and seizures. Supervisors should be trained to periodically check on workers performing tasks in hot areas. In addition, workers should be trained not only to look out for their own health but they also should be monitoring their coworkers. Workers should be trained and encouraged to immediately report symptoms in themselves and others. During training it should be made clear that stopping because you feel unwell is acceptable and encouraged.

Taking time to acclimatize

Acclimatization consists of the natural changes that occur when someone has had long-term exposure to a hot environment. It may take one to two weeks for someone to acclimatize to a hot environment, but afterward they are usually able to sweat more efficiently and tend to have a more stable circulatory system. When someone is not allowed time to acclimatize, he or she may show signs of heat stress and experience difficulty replacing water that has been lost in sweat.

If someone is new to the job or has been away for more than a week, gradually increase his or her workload and provide more frequent breaks during his or her first couple of weeks on the job.

Encouraging breaks and hydration

Being well-hydrated is essential, even before a worker begins his or her shift. Heavy sweating during a shift can mean the worker is experiencing a large loss in water and electrolytes, resulting in problems with how his or her body regulates extra heat. Drinking 8 ounces of water or other fluids every 15 to 20 minutes while performing moderate activities in moderate conditions should be encouraged. Supervisors should remind workers to take hydration breaks.

Cool water should be readily available in a convenient, visible location close to the work area. If workers are in conditions where they are sweating for several hours, sports drinks containing balanced electrolytes should be provided. In addition, your company may want to implement a fluid replacement table that has more specific guidelines that consider the temperature, level of work and the work/rest schedule.

Work/rest schedules take into account the air temperature, the type of clothing and personal protective equipment worn and whether the work is considered light, moderate or heavy.

Providing a cool area for workers to take a rest and water break also is highly recommended.

Additional recommendations

Recyclers should consider these additional recommendations, whether their operations are indoors, outdoors or both.

For indoor operations:

Install air conditioning or increase ventilation (if cooler air is available from the outside).

Use fans to increase air speed, unless the air temperature is higher than the skin temperature.

If high ambient temperatures typically occur, seek a professional consultation.

For outdoor operations:

Monitor weather reports daily.

Reschedule jobs with high heat exposure to cooler times of the day.

When possible, schedule routine maintenance and repair projects for the cooler seasons of the year.

More information

The National Institute for Occupational Safety and Health (NIOSH) is currently updating the “Criteria for a Recommended Standard: Occupational Exposure to Heat and Hot Environments.” This draft document is available online and provides examples of indoor and outdoor case studies and information on a variety of topics, including hydration and fluid replacement, physiological monitoring, acclimatization, work/rest schedules and heat-related illnesses. The content of this technical document may be best suited for a supervisor or safety manager wanting to address heat exposure at his or her operation; however, some of the content also could easily be shared during worker training. To view the draft NIOSH criteria document, visit http://1.usa.gov/1mQVY5n.

Other NIOSH educational materials include:

“OSHA-NIOSH Infosheet: Protecting Workers from Heat Illness,” www.cdc.gov/niosh/docs/2011-174, a three-page PDF co-branded (with OSHA). This is a great resource for managers and safety professionals to review and utilize during training;

Brenda Jacklitsch, MS, is a health scientist at the National Institute for Occupational Safety and Health in the education and information division. She is updating the “Criteria for a Recommended Standard: Occupational Exposure to Heat and Hot Environments.”

Scaling up

Features - Electronics Recycling

When shopping for service providers to handle their end-of-life electronics, cor- porate and institutional consumers continue to rely on standards that establish requirements relating to environmental, health, safety and security aspects of electronics recycling. A growing number of recycling operations, therefore, are seeking and obtaining certifications, as they help to assure clients that processors are meeting a certain level of performance in these critical areas.

Recycling Today last published its list of certified electronics recyclers in September 2012. At that time, 307 recyclers in the U.S., Canada and Mexico were certified to one or more industry certifications: R2 (Responsible Recycling Practices), e-Stewards or the National Association for Information Destruction (NAID) Certification of Sanitization Operations. As of April 2014, the number of certified operations has grown to 539.

Joining the 512 electronics recycling operations in the U.S., Canada and Mexico certified to these standards are 27 overseas operations, including those in Australia, China, Costa Rica, Germany, Hong Kong, India, Ireland, Malaysia, Singapore, Thailand, the U.K. and New Zealand.

Responsible recycling practices

The majority of electronics recycling operations are certified to the R2 Standard, which was developed by a multistakeholder group convened by the U.S. Environmental Protection Agency. The original R2 Standard, R2:2008, was introduced in 2010. The updated standard, R2:3013, became effective July 1, 2013.

Click on the picture above to see the full list of U.S. Canada and Mexico electronics recycling operations certified as of April 1, 2014, to the R2 (Responsible Recycling Practices), e-Stewards and National Association for Information Destruction (NAID) Sanitization Operations standards.

With the updated R2:2013 standards, all R2 certified facilities are required to have an approved environmental, health and safety management system (EHSMS). R2 Solutions, the Boulder, Colo.-based nonprofit organization that houses the standard, says approved management systems include a combination of ISO 14001 and OHSAS 18001 or the Recycling Industry Operating Standard (RIOS), which was developed by the Institute of Scrap Recycling Industries Inc (ISRI). The EHSMS requirement improves the integrity and accountability of the entire R2 certification, R2 Solutions adds.

Additional updates to the standard include changes to export requirements that call for more explicit compliance with export and import laws of all exporting, importing and in-transit countries, whether OECD (Organisation for Economic Co-operation and Development) or non-OECD; a fully comprehensive approach to data security and destruction, assuring the security of all media until it is thoroughly sanitized or destroyed; and clarified downstream due diligence requirements to better track equipment containing focus materials through each vendor until it is sold for reuse or as a commodity, according to R2 Solutions.

E-Stewards

The Basel Action Network (BAN), the Seattle-based nonprofit behind the e-Stewards Standard for Responsible Recycling and Reuse of Electronic Equipment, is in the process of transitioning to its updated standard, Version 2.0. As of May 1, 2014, a company seeking certification or recertification must comply with Version 2.0 of the e-Stewards Standard. Version 2.0, published Nov. 1, 2013, is the first formal revision of the e-Stewards standard.

Click on the picture above to see the full list of International electronics recycling operations certified as of April 1, 2014, to the R2 (Responsible Recycling Practices), e-Stewards and National Association for Information Destruction (NAID) Sanitization Operations standards.

At the time the updated standard was introduced in November 2013, BAN issued a news release that states, “The new version of the standard gains particularly high marks for its enhanced measures to protect private data on digital memory, something extremely important to large enterprise companies.”

The revised standard calls for all used data storage devices to be sanitized “regardless of whether data storage devices are going for reuse, materials recovery or final disposal.” Certified operations also must create a separate program to handle potential breaches of consumer data under the updated e-Stewards standard.

Additional updates to Version 2.0 include changing the frequency of air quality testing and introducing noise level safeguards as well as allowing for landfill disposal of CRTs (cathode ray tubes) and CRT glass “as a last resort.” CRTs and cleaned and uncleaned CRT glass can be sent to lined, leachate-controlled hazardous waste landfills under the revised standard, while nonleaded CRT glass and “thoroughly cleaned” glass may be sent to solid or hazardous waste facilities if permissible under state regulations.

Click on the picture above to see the full map of Certified Electronics Recyclers.

NAID certification of sanitization operations

Phoenix-based NAID introduced its Certification of Sanitization Operations in late 2009. The certification is designed to validate the security of operations that provide hard drive overwriting or erasing services. As with the organization’s certification of its members providing physical destruction services, NAID Certification of Sanitization Operations requires that an independent auditor verify facility security, chain of custody and audit trail.

As of April 2014, 19 operations had been certified to this standard.

NAID also offers an SSD sanitization endorsement and an on-site sanitization endorsement.

Plotting points

Pages 56 and 57 feature a map of the electronics recycling operations in the U.S. that have been certified to one or more of the standards detailed above.

Research for this article was completed by Recycling Today Associate Editor Megan Workman and Managing Editor DeAnne Toto. Contact dtoto@gie.net with questions.

Thinking ahead

Features - Consumer Packaging

Designing products and packaging that can cause an individual to make a purchase remains the primary task of the creative people employed by consumer product companies and their design agencies.

When it comes to food and beverage products, the integrity and shelf life of the product within and the health of the buyer go hand in hand as foremost goals.

Despite the irreplaceability of these high priorities, corporate sustainability initiatives and striving to meet the recycling expectations of consumers and government agencies are causing many brand owners and packaging designers to think more about the end-of-life recyclability of what they put onto store shelves and into coolers.

On the list

The most common forms of packaging—such as old corrugated containers (OCC), aluminum used beverage containers (UBCs) or PET (polyethylene terephthalate) beverage bottles—are well-established globally to recyclers and traders.

Both challenges and opportunities arise in the recycling industry, however, because the world of consumer packaging is never standing still. Makers of food, beverages and other products are always seeking a competitive edge and often turn to innovative packaging designs and ideas to provide that edge.

Canada reports plastic progress

The Canadian Plastics Industry Association (CPIA), Mississauga, Ontario, has conducted research that it says points to increased plastic packaging recycling taking place in that nation.

The report, titled “2012 Post Consumer Plastics Recycling in Canada Report,” has been designed to provide detailed information on the favorable recycling trend.

Moore Recycling Associates Inc., Sonoma, Calif., the firm that researched and wrote the report for CPIA, says the recycling of postconsumer plastic packaging in Canada increased for the third straight year in 2012. An additional 10 percent of plastic packaging was recycled in 2012 compared with 2011. The increase is the result of more material collected for recycling as well as more companies providing recycling information, according to the report.

In total, more than 628 million pounds (314,000 tons) of postconsumer plastic packaging was collected for recycling in 2012 in Canada, the report notes.

“We are pleased to see an overall increase in companies participating in this valuable survey and in the amount of plastic packaging collected and recycled in Canada,” says Carol Hochu, president and CEO of the CPIA. “The survey results found that [314,000 tons] was recycled, 83 percent of which remained in North America.

“We continue to work with our members to build and grow our national recycling industry in Canada,” Hochu continues, “reusing valuable plastic materials and creating jobs."

The 2012 results show an increase of 3 percent in the recycling of plastic bottles between 2011 and 2012, a 29 percent increase for nonbottle rigid plastics, an increase of 18 percent for plastic bags and outer wrap and a 24 percent increase for polystyrene foam.

The report says compounders and consumers of plastic scrap in Canada are eager for more supply and have under-utilized capacity, which creates ample opportunity for consumers and businesses to supply recyclers with more scrap. The report estimates the film and bag recycling capacity rate in Canada increased from 38 percent to 49 percent in 2012 and the nonbottle rigid recycling capacity rate went from 47 percent to 60 percent.

For a creative person in the design field, this is a welcome process. For recyclers, however, this can be a far less exciting prospect, as a new design may introduce a new material or a combination of materials that is difficult to separate.

Whether the changes are welcome or not, recyclers must stay attuned to new types of packaging. Traditionally, recyclers have found themselves well outside the decision-making process of brand owners and designers as they created new types of packaging.

Corporate sustainability and product stewardship trends, among other factors, have begun to change that situation. Ronald deVlam of design firm WebbdeVlam, which has offices in Chicago and London, says consumer product companies are increasingly focusing on “doing well and doing good” as they try to build sustainability and environmental stewardship track records they can point to with pride.

Speaking to attendees of the 2014 Paper & Plastics Recycling Conference Middle East, held in Dubai, United Arab Emirates, in March, deVlam said lightweighting (to save on transportation energy consumption) and closing the loop are among the priorities for companies making packaging design decisions.

Makers of detergents and cleaners increasingly sell products in a concentrated form that cuts down on the amount of overall packaging used.

In terms of consumer products companies closing the loop, Coca-Cola Co., Atlanta, received the 2010 Design for Recycling Award from the Institute of Scrap Recycling Industries Inc. (ISRI), Washington, D.C, for its use of the PlantBottle—a biopolymer that is compatible with PET for recycling purposes.

Upon winning the award, Coca-Cola said it had been working to develop the compatible container for more than a decade. “For the past 10 years, we’ve been working to discover a way to completely decouple the plastic used in our bottles from oil without compromising the advances made in efficiency, recycling and product production,” stated Scott Vitters, who at the time was head of global sustainable packaging for Coca-Cola Co. “Instead of focusing on developing an entirely new renewable resin, we decided to leverage the existing value of PET plastic and make it even better,” he added.

Another company that has been putting considerable energy and investment into packaging recyclability is Sweden-based Tetra Pak, which creates multimaterial juice and beverage cartons designed to extend the shelf life of such products.

Sustained effort

At times during its more than 60-year history, Tetra Pak has been criticized by recycling advocates for its package design (known as aseptic packaging), which consists of layered paperboard, aluminum and polymer laminates.

Toikka said the use of the three materials is intrinsic to the design of the company’s package, so major design changes are unlikely. However, that hasn’t stopped Tetra Pak from paying greater attention to recyclability.

In the U.S., Tetra Pak has been a key backer of the Vernon Hills, Ill.-based Carton Council, www.recyclecartons.com. The industry-funded organization has focused on increasing collection of aseptic cartons and other juice and beverage cartons. It also has funded equipment to help recyclers sort out cartons from commingled streams and has worked with paper mills to encourage the pulping of cartons at mills.

(More information about the Carton Council’s efforts can be found in the article “An expanding frontier” in the December 2012 edition of Recycling Today. An article titled “The ABCs of recycling” in the March 2014 edition of Recycling Today provides an update on the Carton Council’s collection efforts in schools.)

In his presentation, Toikka emphasized that Tetra Pak’s product is designed to prevent waste of another kind—food and beverage spoilage. According to Toikka, a United Nations study estimates that some 1 billion tons of food is spoiled or otherwise wasted each year, with the problem being especially acute when packaging is lacking.

While food and beverage waste prevention is Tetra Pak’s primary mission, the company understands the need to prioritize recycling, Toikka said. “Recycling is no longer optional, it is essential and is the most sensible thing to do.”

The efforts of the Carton Council in the U.S. and similar programs in other parts of the world have made a difference in terms of aseptic packaging, Toikka said.

Tetra Pak’s figures indicate that globally some 343,000 metric tons of Tetra Pak cartons were recycled in 2007, but that amount has climbed steadily in each of the subsequent six years. By 2012, the figure had reached 581,000 metric tons, and in 2013 it climbed to 623,000—a 7 percent year-on-year increase.

The 2013 totals reflected a 24.5 percent global recycling rate for aseptic cartons, with some 43 billion cartons being recycled.

Paper mills can effectively turn nearly 75 percent of the collected weight back into a new product, with tissue mills often being a common destination for cartons. It is unclear in this case to what extent, if any, the plastic or aluminum can be recovered by mills for recycling purposes.

“Technology is no longer a limitation,” said Toikka regarding the ability for these two materials to be recovered, though the cost effectiveness for a mill to do so remains an issue.

In some parts of the world, including the Middle East, the first step of carton collection has yet to be addressed, Toikka acknowledged. “Sorting and collection requires cooperative effort,” he said, with Tetra Pak being on the lookout for allies.

Collection first

Sana’a Al-Ghemlas of Kuwait Packing Materials Manufacturing Co. said her PET bottle recycling firm is constantly seeking more feedstock for its recycling line.

Al-Ghemlas said prorecycling government policies and recycling habits are lacking in many parts of the Middle East. In the region, the No. 1 recycling code stamped on water and soft drink bottles to many people “means you can use it only once,” she quipped.

Kuwait is about the size of New Jersey but only about 8 percent of the land is occupied, said Al-Ghemlas. Nonetheless, the nation is home to 16 landfills and it spends some $85 million per year on solid waste disposal. She estimated that some 10,000 tons per year of PET bottles are “thrown away” in Kuwait, despite the existence of her company’s PET recycling operation.

Although Al-Ghemlas expressed doubt concerning the Kuwait government’s lack of attention to recycling collection, Stuart Fleming, founding partner and CEO of Dubai-based Enviroserve, said working with the government of Dubai to help draft recycling-friendly legislation has been a good experience for his company.

Fleming said he helped draft a mobile phone recycling law that has subsequently been adopted in Dubai. Fleming pointed to this as an outcome that was preferable to complaining.

When a product or package has a low recycling rate, “We can blame others or the government,” said Fleming, but ultimately individuals are responsible for making purchasing decisions or taking actions that can increase recycling rates.

Fleming said one of Enviroserve’s latest initiatives, being conducted in cooperation with the Dubai Municipality government, is “The Green Truck,” a collection truck for household recyclables, such as paper, plastic bottles and aluminum beverage cans as well as obsolete electronics.

Fleming said the truck is seeking customers in targeted residential areas. “We’ve got 150 households signed up, and we get a couple of calls per day.” He called it part of an effort “to create a recycling system at homes and offices. I’m excited. I’m investing in it.”

Considering the global trends toward sustainability and product stewardship, recyclers in the Middle East region may have good reason to invest in the growth of postconsumer packaging recycling.

The author is editor of Recycling Today and can be contacted at btaylor@gie.net.

Well adjusted

Features - Cover Story

Atlantic Recycling Group (ARG), Rockville, Md., was formed in 2006 through the combination of two scrap recycling companies with deep roots in the Baltimore-Washington, D.C., metropolitan area.

In the ensuing eight years, ARG’s management team, led by co-owners David Caffee and Robert Millstone, has solidified the company’s presence in the Mid-Atlantic region while also adjusting to an economy and a scrap market that has required their constant attention to strategic decisions.

By continuing a tradition of innovation and managing people to maximize their potential, David, Robert and ARG President Aaron Hill say, despite the current challenges in the market, they are enjoying guiding the company as it navigates through an increasingly competitive scrap climate in the capitol region.

Combining strengths

One of ARG’s roots traces back to a 1-acre paper recycling center that was started by Robert Millstone’s father, Phil Millstone, in Rockville, Md., in 1949.

Phil guided the business, later known as Montgomery Scrap Corp. (MSC), to the point where it outgrew its original home and moved to a different 7-acre location in Rockville. Robert says as a younger man it was not his intention to inherit the reins of MSC; but, as his father’s health failed, he stepped in to keep the business operating. Phil died in 1978, and Robert continued what has turned out to be a four-decade career in the recycling industry.

In 1986, Robert hired David, a nonferrous scrap trader who two years later became a partner in the MSC business. Together, Robert and David shifted the company’s business model away from paper and heavily into nonferrous and ferrous metals.

While Robert was learning the scrap trade and leading MSC, the Shapiro family was operating one of the Baltimore region’s first auto shredders at United Iron & Metal (UIM).

“United Iron and Metal was started by the Jacob Shapiro family in 1912 and has remained in its current location on Wilkens Avenue in southwest Baltimore ever since,” Robert says. The company established a second location on Pulaski Highway in east Baltimore in the 1960s. It was idled in the 1990s and restarted in 2011 after the merger with MSC.

The UIM shredder yard was sold by I.D. Shapiro to the Cincinnati-based David J. Joseph Co. (DJJ) in 1990 and then changed hands again when DJJ resold it in 2001 to a group of UIM managers.

Throughout this time, UIM had been a buyer of MSC sheet iron to feed its Baltimore shredder. The leaders of the two companies began talking about the potential of a merger in 2005 and completed the transaction in 2006.

One of the UIM partners retired and was bought out by the others before the merger. The remaining two UIM partners, Ed Johnson and Joseph LiPira Jr., were bought out by Robert and David in 2009 and 2012, respectively.

The resulting family of companies has put current partners Robert and David in a much different situation from the one they had when David was hired in 1986. “In 1986, MSC had one roll-off truck and eight containers and processed less than 500 tons per month of steel,” David says. “By the time of the merger with UIM in 2006, MSC had 30 power units and over 400 roll-off containers and numerous flatbed, dump and van trailers. Ferrous volume grew to over 2,500 tons per month, and nonferrous volumes also grew significantly,” he adds.

The ARG holding company formed by the 2006 merger now processes scrap at four locations, two of which retain the UIM brand and two that still carry the MSC name. Both UIM locations are in Baltimore, while MSC has its Rockville plant as well as a retail feeder yard in Wintersville, Ohio. “Also under ARG is the M-Scrap Transportation Services company,” David says, “which provides trucking for UIM and MSC.”

Separating with service

Robert and David say their managerial skills were tested by the financial crisis and subsequent recession in late 2008 and 2009.

“The post-merger years of 2006 to 2008 were very successful and profitable for ARG, with the hoped-for synergies of the companies’ strengths being realized to an even greater degree than either had anticipated,” says David.

“When the 2008 fourth quarter collapse hit, ARG was well-situated with excellent high-priced sales to creditworthy buyers and no inventory exposure,” he continues. “The profitability of those first nine months of 2008 left us in a strong position to weather the storms of the following 12 months,” David adds.

The dramatic drop in scrap volumes, however, was tougher to weather. ARG’s leaders “made the difficult decision to downsize the company’s employee count to meet the new reality during that time,” says David. “A leaner, more efficient company emerged, ready to take advantage of improving conditions in late 2009 and 2010.”

Teachers and mentors

The principals of Atlantic Recycling Group (ARG), Rockville, Md., have had long careers in the scrap industry and each has benefitted from learning from key mentors when he was younger.

ARG Chairman Robert Millstone learned his earliest recycling lessons from his father, Phil. Robert started working at his father’s business, Montgomery Iron & Metal, after school and on Saturdays. He says he was assigned “the dirtiest of jobs, including cleaning the scales or unloading material from customers’ vehicles.”

After graduating from high school, attending college and then being drafted into the Army, Robert came back to work at the scrap yard with the intention of only staying for a short time. However, the declining health and sudden death of his father in 1978 resulted in him running the business.

David Caffee, ARG CEO, was recruited by scrap company Southern Foundry Supply of Chattanooga, Tenn., in 1980 after graduating from Brigham Young University with an undergraduate degree and earning an MBA at the University of North Carolina.

Caffee says Stephen Chazen of Southern Foundry Supply “was a great mentor” and “remains a respected friend to this day.” (Southern Foundry Supply was acquired by Philip Services Corp., now PSC Metals, in the late 1990s.)

Starting with Chazen and many other recyclers and traders he has met since, Caffee is grateful for industry friendships. “The scrap industry has been good to me,” he comments. “There are so many good, decent honest people—and fortunately many fewer who aren’t—with fascinating stories. I am saddened a little when an older industry friend retires or passes away, since I have learned so much from these mentors and friends and owe them so much gratitude.”

Both before and after the recession, ARG and its predecessor companies have used innovative techniques to distinguish themselves in the regional scrap market. Three decades ago, Robert started a mobile scrap buying operation in which stake body trucks (partially enclosed small flatbed trucks) were outfitted with certified scales.

“MSC buyers went (and still go) to small to midsize nonferrous manufacturing and contractor accounts and brought carts in which the customer could place their scrap to be weighed and paid on the spot,” says Robert.

“This concept proved to be a very convenient service with the comfort factor of the customer knowing he is getting fair and accurate weights without having to wait for payment. This service was so popular it has been copied by every nonferrous dealer in the greater D.C. area,” he adds.

Service overall remains vital for any scrap company that wants to stay competitive, according to David. “We get a lot of business because we are able to respond to a scrap service need, large or small, with an array of transportation options, usually within 24 hours or less,” he says.

The fixed point of reliable service will be important for ARG as it competes within a recycling industry that offers wave after wave of changes and challenges.

Facing forward

Among the changes in ARG’s market region have been a reduction in ferrous scrap consumers and added competition on the auto shredding side.

“We are fortunate to have some mills close enough to truck to, barge to and ship by rail to, which gives us flexibility and options, but having lost RG Steel at Sparrows Point, Md., and Claymont Steel [in Delaware] in the last two years has certainly made the remaining area mills less hungry and less aggressive on pricing relative to their Midwest counterparts,” says David.

“The presence of exporters on the East Coast is a two-edged sword: When they are loading cargoes for export markets, they take units away from the area and keep the local mills on their toes,” David continues. “But when they are not exporting, their tonnages end up as excess supply on the domestic market, keeping Mid-Atlantic mill prices down. The absence or presence of Indian ferrous container buyers has the same effect.”

Although the steel industry may be smaller in the Mid-Atlantic region than it used to be, that hasn’t stopped scrap recyclers from investing in auto shredders.

“The Washington, D.C.-Baltimore metropolitan area is very competitive on all material,” says David of his local scrap sector. “There are many shredders (too many?) and dealers in this area, and overcapacity is an issue—too many yards chasing too little scrap”

The result, says Robert, is a “margin squeeze from overcapacity on available scrap [and] escalation of costs (transportation, fuel, insurance, equipment, supplies, wages and taxes) with no corresponding increase in volume or margin,” he comments.

Also contributing to increased cost have been “tightening regulations on buying and processing scrap, much of it theft-related,” notes Robert.

Just as service is a critical competitive advantage on the scrap buying side, strong relationships are vital on the sales side, says David.

“Export markets are here to stay, but they can be very inconsistent,” he comments. “Maintaining relationships and tonnages with all market partners becomes tricky but crucial. Knowledge of all markets and things that affect them (supply, demand, economic trends, currency movements, geopolitical events) are all things that even the smaller dealers need to be aware of to survive and to make good decisions,” says David.

For the past few years, as Robert and David have tried to uncover and absorb market information, they also have been bringing Aaron into increasingly responsible positions so he can learn as well.

Robert and David do not have retirement dates in mind; but, with the younger Aaron currently serving as president, they say they are glad they have developed the next generation of leadership at ARG.

Aaron, likewise, has been identifying younger employees on the operations side to bring into positions of increased responsibility so that important institutional knowledge is retained and additional leaders can emerge.

As they look back at having worked together for nearly 30 years, Robert and David say there have been some surprises along the way.

“I don’t know that we ever envisioned owning a shredder,” Robert says.

While David adds, “I’m pretty amazed that we took such a hard turn into the ferrous business.”

With Aaron and others on board (including David’s son Ben, who is general manager of the Rockville facility, and Troy Simms, general manager at the UIM locations), Robert and David are encouraged that ARG is equipped to handle challenges and make bold decisions when necessary.

Among the philosophies David says ARG tries to maintain is to “take care of problems quickly, fairly and personally. Problems are not like wine—they get worse, not better, with age.”

A priority in recent years has been to “develop a management team and trust them to do the job—it makes life easier for you and more fun for them,” he adds.

Another piece of advice from David to his young managers: “Things are almost never as bad as they seem and will usually get better. Faith and optimism are valuable qualities in this and every business.”

The author is editor of Recycling Today and can be contacted at btaylor@gie.net.

Smaller surplus

Features - Commodity Focus

Ferrous scrap recyclers have been coping with subpar industry conditions consistently since the subprime mortgage crisis triggered the recession beginning in the second half of 2008.

The shriveled construction sector and other scrap supply-related problems most often are cited as problems by ferrous scrap recyclers, along with the competitive atmosphere created by the increased shredding capacity brought online from 2002 to 2008.

Within the past year, ferrous scrap processors and shippers that are set up to serve the export market have one additional problem with which to cope: a troubling reduction in demand and orders placed from overseas buyers.

The combination of tight supply and lackluster overseas demand has made the ferrous scrap market especially troublesome for recyclers on the Atlantic and Pacific coasts and has produced a ripple effect, making life a little more difficult for scrap recyclers throughout North America.

Honest snapshot

Los Angeles scrap recycler Doug Kramer of Kramer Metals Inc., who also serves as the current chairman of the Institute of Scrap Recycling Industries Inc. (ISRI), Washington, D.C., titled a March 2014 presentation he gave in Dubai, United Arab Emirates, “Demand for Ferrous Scrap and Prospects for 2014: A West Coast Perspective.”

Speaking to attendees of the 2014 Middle East Metals Recycling Conference, organized by the Recycling Today Media Group and Media Fusion, Kramer portrayed his home state of California as one that is coping with the same challenges facing scrap recyclers throughout the U.S. as well as dealing with problems unique to the Golden State.

Among the industry conditions affecting Pacific Coast recyclers has been a steady decline in ferrous scrap demand from overseas buyers during the past 30 months or so.

The U.S. shipped 22.7 million metric tons of ferrous scrap overseas in 2011, helping boost ferrous scrap prices and bolstering an industry that was in many other ways still recovering from the financial industry meltdown of 2008.

That demand dropped to just 20 million metric tons in 2012, however, and fell another 14 percent to 18.6 million metric tons in 2013. Because per-ton pricing also dropped in 2013, ferrous scrap export revenue declined by an estimated 20 percent in 2013 compared with 2012.

The decline, Kramer said, was a departure from the pattern that reigned from 2000 to 2011, when the volume of U.S. scrap exports grew by a multiple of five, according to the ISRI chairman.

In 2013 the weaker demand affected not just Pacific Coast exporters but also those on the Atlantic and Gulf coasts, as nations buying less U.S. ferrous scrap included Turkey (down 18 percent) and India (down 60 percent).

Shippers in California also were affected by reductions in buying from Taiwan (down 15 percent) and South Korea (down 11 percent). While China’s demand was relatively stable (down 1 percent), it has not been among the three largest ferrous scrap buyers since 2009, when its steel mills came into a down market to buy 13.7 million metric tons of scrap from North America and other parts of the world. In subsequent years, it has purchased less than half this amount, including less than 5 million metric tons in 2012 and 2013.

The dwindling of the export market is evident in pricing tracked by American Metal Market (AMM). Throughout late 2013 and so far in 2014, AMM’s West Coast and East Coast Ferrous Scrap Index prices have traded at a much lower range compared with its Midwest scrap price index figures.

In the early March 2014 buying period, while recyclers were able to receive from $373 to $391 per ton from Midwest mills (depending on the grade), AMM’s West Coast export index price stood at just $330 per ton, while the East Coast index price was down to $322 per ton. As well, AMM said it was at times having difficulty updating its export index prices because of a lack of transaction activity.

With steel output in the United States having been stable in the 75 percent mill capacity range, the drop in ferrous scrap export orders eventually brought prices down for all sellers. While the No. 2 shredded scrap grade as tracked by the Raw Material Data Aggregation Service (RMDAS) of MSA Inc., Pittsburgh, started the year trading at $436 per ton in January 2014, it dropped to $405 per ton in February and declined further to $388 in March 2014.

Recyclers on the western and eastern seaboards might have borne the brunt of the initial impact of lagging export orders, but it was not long before recyclers in the rest of the country shared in the misery.

And another thing

The reduction in export shipping represents a newer challenge on the sell side for the scrap iron and steel sector, while a competitive fight for tight supply remains the reality on the buy side.

In his “West Coast Perspective” presentation, Kramer said this struggle to find sufficient ferrous scrap feedstock to match processing capacity is especially noticeable in his home state of California.

Despite its reputation as a state with a regulatory framework that can be hostile to the manufacturing sector, California experienced manufacturing output growth of between $10 billion and $15 billion in 2007 and 2008.

That pattern was thrown into a sharp reversal in 2009 and 2010 when output declined by $10 billion to $15 billion in the Golden State, Kramer said, citing data from the Bureau of Economic Analysis of the United States Department of Commerce.

After manufacturing output in California fell by another $5 billion in 2012, the sector finally rebounded with a $15 billion gain in output in 2013. However, total 2013 manufacturing output in the state, at $205 billion, remains below the $219 billion level it was at in 2008.

Kramer showed U.S. Bureau of Economic Analysis figures from other regions of the country for the same time frame that reflected similar patterns. These numbers were one reason why he said he “still sees significant recession in the Western U.S.” and that he found himself asking, “Are we really in recovery?”

The slow-motion manufacturing rebound, which affects supplies of prompt ferrous scrap grades, such as No. 1 busheling, has been matched by an equally slow moving rebound in the construction sector.

Since construction and demolition activity is a major generator of ferrous scrap that goes into the plate and structural (P&S) and No. 1 heavy melting steel (HMS) grades, it also has created what Kramer called “heightened competition for available feedstock” in these grades.

Hoosier supremacy

Ferrous scrap processors and exporters are likely aware that Turkey has been holding the position as the world’s leading destination for internationally traded ferrous scrap for several years.

Within the United States, a steel- and scrap-related crown has been held for a longer time by the state of Indiana. According to a report in the Northwest Indiana Times, Munster, Ind., American Iron and Steel Institute (AISI), Washington, D.C., figures show the Hoosier state has been the leader in steel production in the U.S. every year since 1980.

Rachel Gilbert of the AISI indicated to the regional newspaper that northwest Indiana has weathered the changes and consolidation in the domestic steel industry in part because its Great Lakes ports make it a cost-effective location to receive iron ore and other raw materials required by integrated steelmakers.

The state also is located in the ferrous-scrap-rich Midwest, helping to make Indiana popular with electric arc furnace (EAF) steelmakers, such as Nucor Corp. and Steel Dynamics Inc.

Although AISI does not disclose state-by-state production figures, the association’s Great Lakes region, which includes Indiana, churned out 34 million of the 94.7 million tons of steel produced in the U.S. in 2013, or nearly 36 percent of the national total.

Shredded scrap grades, the other most common type of ferrous scrap, have been affected not only by restrained economic activity on several fronts but also by a growth in processing capacity that was unfortunately timed in sync with these reduced scrap flows.

Scrap processors in many parts of the country have identified it as a competitive must to be able to produce shredded grades. Many have been heartened to find that equipment manufacturers have introduced increasingly affordable shredders that carry smaller upfront costs and potentially workable operating costs for small to medium-sized recycling companies.

Whether caused by increased demand for ferrous scrap from consumers or increased production by processors who have shredders at the ready, shredded grades have emerged as the ferrous scrap sector leader. According to the U.S. Geological Survey, Reston, Va., some 16 million metric tons of shredded ferrous scrap grades were produced in the U.S. in 2012 compared with less than 14 million tons of No. 1 and No. 2 HMS, about 7 million tons of P&S grades and less than 5 million tons of No. 1 busheling.

For a number of existing shredding plant operators, the competition has been unwelcome and has resulted in dwindling flows and margins. Although numerous new automobile shredders have come online in the U.S. in the past five years, many existing plants have greatly scaled back their operating hours and output or, in some cases, have been temporarily idled.

While shredded scrap is being produced in record numbers, few ferrous scrap processors claim they are seeing a compatible rise in operating margins or profits.

Status reports

Recyclers looking for signs as to how the rest of 2014 may differ from the current situation likely would receive mixed signals, as has been typical of the global economy in the past five years.

In the U.S., the automobile and light truck sector has been one brighter spot in that time frame. Americans purchased some 15.6 million vehicles in 2013, allowing manufacturers to produce at a range closer to the prerecession figure and well above the abysmal 11.4 million vehicles sold in 2009.

In February 2014, Americans were buying vehicles at an annualized rate of 15.3 million units, signaling a slight downturn in this vital scrap generation market.

The road back to a healthy construction sector in the United States remains a long and winding one. The Associated General Contractors of America (AGC), based in Arlington, Va., measures the industry’s pulse in part by tracking construction employment levels, which were rising throughout much of 2013 and in the first month of 2014.

Between January 2013 and January 2014, construction employment expanded in 195 metro areas, was level in 54 regions and declined in 90 metro areas, according to an analysis of federal employment data that was conducted by the AGC.

“It is a sign of the continued strengthening of the construction industry that nearly 60 percent of metros added construction jobs from a year earlier despite the severe winter conditions in much of the country this January,” says Ken Simonson, the association’s chief economist. “Nevertheless, the industry’s recovery has a long way to go with only a smattering of metro areas exceeding their previous peak January levels of employment.”

Perhaps providing some hope in Kramer’s operating region, the Los Angeles-Long Beach-Glendale, Calif., metro area added the largest number of construction jobs, with a 7 percent rise in employment creating 8,100 construction jobs.

Another 7,800 construction jobs were added in the adjacent Santa Ana-Anaheim-Irvine, Calif., region, while the building industry also ramped up in the Houston area (adding 7,900 jobs), the Dallas area (adding 7,200 jobs) and Baton Rouge, La. (adding 4,500 jobs).

Construction cranes have been less common in other metro areas, with net building industry job losses experienced in metro areas such as Gary, Ind.; Norfolk, Va.; and Westchester, N.Y.

Ferrous scrap recyclers will be among those hoping that the pace of that digging will increase throughout 2014, ideally generating additional scrap as well as increasing the output figures at domestic steel mills.

The author is editor of Recycling Today and can be contacted at btaylor@gie.net.